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April 5 2012 issue

Thursday, April 05, 2012
Sandler, Travis & Rosenberg Trade Report

NAFTA Countries Issue Guidance on Origin Certificate, Plan More Rule of Origin Changes

Trade ministers of the U.S., Mexico and Canada met in Washington, D.C., April 3 for the annual session of the NAFTA Free Trade Commission. A joint statement issued at the conclusion of that meeting indicates that while the ministers discussed numerous items of interest only a few specific results were achieved. One is the finalization of a fourth set of changes to the NAFTA rules of origin on goods worth a combined $135 billion in trilateral trade and an agreement to commence work on a fifth set of changes. The trade ministers also agreed to release a document answering basic questions about the NAFTA certificate of origin, which has already been posted on the Office of the U.S. Trade Representative’s Web site ( Other measures announced include an exploration of work to enhance trade in chemicals, including on rules of origin, customs procedures and classification, and the exchange of information on trade flows and cross-border supply chains for used electronics within North America.

CDC Sees Increase in Disease Outbreaks Caused by Imported Foods

The Centers for Disease Control and Prevention announced recently research showing that foodborne disease outbreaks caused by imported food appeared to rise in 2009 and 2010. In addition, nearly half of the outbreaks implicated foods imported from areas that previously had not been associated with outbreaks. One CDC official said it is “too early to say if the recent numbers represent a trend,” and another warned that the agency’s findings likely underestimate the true number of outbreaks due to imported foods.

According to a CDC press release, between 2005 and 2010 there were 39 outbreaks and 2,348 illnesses linked to imported food from 15 countries. Nearly half (17) of the outbreaks occurred in 2009 and 2010. Fish were the most common source of these outbreaks (17), followed by spices (six, including five from fresh or dried peppers). In addition, nearly 45% of the imported foods causing outbreaks came from Asia.

However, the CDC acknowledges that the rise in the number of outbreaks associated with imported food has occurred at the same time the volume of such imports has seen a big jump as well, and there appears to be no indication that the ratio of outbreaks to imports has increased. U.S. food imports grew from $41 billion in 1998 to $78 billion in 2007, the press release states, and much of that growth has occurred in fruits and vegetables, seafood and processed food products. About 16% of all food eaten in the U.S. is imported, including up to 85% of seafood and 60% of fresh produce. The CDC adds that the types of food causing outbreaks during the period of review aligned closely with the types of food that are most commonly imported.

Annual Report Finds “Great Strides” in Improving IPR Enforcement

The Office of the Intellectual Property Enforcement Coordinator has released a report asserting that the federal government has made “great strides” over the past 18 months in implementing the 33 action items set forth in the Joint Strategic Plan for Intellectual Property Enforcement (wti/wti.asp?pub=0&story=34881&date=&company=). The report states that there has been greater coordination among government agencies on IPR enforcement efforts such as securing supply chains, pursuing sources of counterfeit and pirated goods, and meeting the challenges posed by emerging criminal trends such as online sales of counterfeit pharmaceuticals, economic espionage and targeted theft of trade secrets. Specific items of note include the following.

- An interagency working group is in the process of finalizing a strategy to ensure that the U.S. government does not purchase and use counterfeit or pirated goods. This group is examining existing tools as well as the need for new tools to maintain the integrity of the federal supply chain.

- IPEC intends to encourage trading partners to take steps similar to those taken in the U.S. to develop voluntary agreements that will result in reducing infringement in international and domestic supply chains.

- Keeping in mind that voluntary agreements and best practices can also be effective tools to address infringement in the physical world, over the next year IPEC and other federal agencies will work with companies from a range of sectors on voluntary means to keep global supply chains free of pirated and counterfeit goods and reduce the risk of theft of trade secrets.

- The FBI increased its number of new trade secret investigations by 29% and its number of health and safety investigations by 87% in fiscal year 2011. The number of prison sentences of 60+ months and 37-60 months doubled and tripled, respectively.

- FY 2011 marked the first time that U S embassies in 17 key countries – China, Brazil, India, Russia, Thailand, Canada, Chile, Egypt, Colombia, Mexico, Ukraine, Spain, Saudi Arabia, Israel, Peru, Turkey and Nigeria – each had a formal interagency team of U.S. government personnel stationed there to help improve the host country’s protection and enforcement of intellectual property rights.

- The U.S. government is for the first time conducting an economic analysis to identify the industries that most intensively produce intellectual property and measure the importance of those industries to the U.S. economy. IPEC believes that improved measurement of intellectual property linked to measurements of economic performance will help the government understand the role and breadth of intellectual property in the U.S. economy and will inform policy and resource decisions related to IPR enforcement.

Click here for IPEC report

FDA Reviews Achievements of Foreign Posts, Has No Plans for More

The Food and Drug Administration has made available a recent report to Congress on the operation of its foreign posts. The report states that in 2011 foreign posts enhanced interactions that allow FDA to obtain more information about how products are produced and transported to the U.S., which helps inform FDA decision-making on products at U.S. ports of entry. Foreign posts also conducted seminars and conferences on FDA policies, requirements and expectations as well as workshops to train foreign government staff in processes and methods to help ensure product safety. In addition, in-country investigators in China and India completed a total of 79 and 63 inspections, respectively. See the report (link below) for details on specific achievements.

As of June 30, 2011, FDA had 13 foreign posts in China (Beijing, Shanghai and Guangzhou), India (New Delhi and Mumbai), Latin America (San Jose, Costa Rica; Santiago, Chile; and Mexico City, Mexico), Europe (Brussels, London and Parma, Italy), sub-Saharan Africa (Pretoria, South Africa) and the Middle East/North Africa (Amman, Jordan). FDA uses a number of criteria to determine where to establish foreign posts, including the volume of imported products, the magnitude of the problems that have been associated with imported products over the years from certain countries/regions, the stability of the political and security environments, and the political relationships and receptiveness of the country to the presence of FDA in-country staff.

FDA reviews these criteria periodically, as well as the location of its posts and their staffing, to determine what changes may be appropriate due to shifts in the global environment, increasing complexities of supply chains, results achieved and budget realities. FDA has requested permission to establish a post in Brazil given the increasing number of imports from that country and specific concerns regarding medical devices, tobacco products and counterfeit medicines, and discussions are ongoing. Other than that, however, FDA has no plans to open additional foreign posts at this time.

Click here for FDA report

Labor Groups File DR-CAFTA Petition Against Honduras

The AFL-CIO and several Honduran trade unions filed with the Department of Labor March 29 a petition alleging that the government of Honduras has failed to effectively enforce its labor laws and comply with its commitments under DR-CAFTA. According to an AFL-CIO press release, the petition focuses on problems in three export-related sectors: manufacturing, agriculture and port operations. The petition also asserts that workers in Honduras have continued to see violations of their rights of freedom of association, collective bargaining and acceptable conditions of work under national and international law. The press release notes that in 2010 the Honduran government amended the labor law to allow employers to hire up to 40% of their workforce on temporary, part-time contracts for work that is by nature full-time permanent work, purportedly as a means to boost employment in the wake of the economic crisis.

Of Note: U.S. Considers Expanding CBI Benefits, China Lowering Tariffs, EU-Vietnam Talks

Expanded CBI benefits, IPR among topics in U.S.-Caricom talks

China to cut import duties on some energy, materials

Commission and Vietnam green-light FTA talks

$2.75 Million Fine for Auto Parts Price Fixing

The Department of Justice announced April 3 that a Japanese company will pay a $2.75 million criminal fine after pleading guilty to participating in a conspiracy to fix the prices of auto parts used on antilock brake systems installed in U.S. cars. The company will also cooperate with DOJ’s ongoing investigation into price fixing and bid rigging in the auto parts industry. A DOJ press release notes that thus far in this investigation eight executives and four companies have agreed to plead guilty, three companies have been sentenced to criminal fines totaling more than $748 million, and seven executives have been sentenced to a total of more than 122 months in prison.

Lead Limit Exemption Granted for Ride-On Toy Components

Effective April 5, the Consumer Product Safety Commission is granting an exemption from the 100 parts per million lead content limit for children’s products for certain aluminum alloy components of children’s die-cast, ride-on pedal tractors and similar component parts made of aluminum alloy on similar ride-on children’s products for children ages 3 years and older. These components include body castings (right and left sides), rear wheel hubs, wide front axle yokes, wide front-end adaptor brackets and other similar component parts that are not likely be placed in the mouth or ingested or extensively contacted by children because of their function and location on the product. These components may instead meet a lead content limit of 300 ppm.

Under section 101(a) of the Consumer Product Safety Improvement Act, consumer products designed or intended primarily for children 12 years old and younger that contain lead content in excess of 100 ppm are considered to be banned hazardous substances under the Federal Hazardous Substances Act. However, section 101(b)(1) allows the CPSC to exclude a specific product, class of product, material or component part from this limit if it determines that (i) the item/items require the inclusion of lead because it is not practicable or not technologically feasible to manufacture the item/items in accordance with section 101(a) by removing the excessive lead or making the lead inaccessible; (ii) the item/items are not likely to be placed in the mouth or ingested, taking into account normal and reasonably foreseeable use and abuse by a child; and (iii) an exception for the item/items will have no measurable adverse effect on public health or safety (i.e., will result in no measurable increase in blood lead levels of a child), taking into account normal and reasonably foreseeable use and abuse.

In this case, the components at issue are made of aluminum metal die castings, which the petitioner asserted are the best alloy of choice based on weight, cost, structural properties, surface finish and coatings, corrosion resistance, and bearing properties and wear resistance. These components are manufactured via the aluminum die-casting process, and the petitioner said it is unable to consistently meet the 100 ppm lead content limits due to alloys used in this process.

Click here for CPSC notice

Foreign Regulatory Changes Could Affect Exports of Animal Feed, Alcoholic Beverages, Pesticides

According to the National Institute of Standards and Technology, the World Trade Organization has been notified of regulatory changes that may affect exports of specific products to the following countries. For information on how these restrictions may affect your business, contact ST&R.

Costa Rica – technical regulation on good manufacturing practices for products used in animal feed (comments due by April 13)

Guatemala – technical regulation establishing labeling requirements for pre-packaged fermented alcoholic beverages for human consumption

Guatemala – technical regulation establishing registration requirements for botanical pesticides for agricultural use

Honduras – technical regulation establishing registration requirements for microbiological pesticides for agricultural use (comments due by April 7)

Revised Government Procurement Agreement Adopted

The World Trade Organization announced March 30 that its Committee on Government Procurement has formally adopted the revised Government Procurement Agreement after more than a decade of negotiations. According to a press release from the Office of the U.S. Trade Representative, the updated GPA includes additional market access commitments that will provide U.S. goods and services suppliers with new opportunities to participate in central and sub-central procurement in other participating countries. In addition, USTR states, the text of the agreement has been modernized to reflect current procurement practices and clarify obligations.

Parties to the GPA include Armenia, Canada, the European Union (and its 27 member states), Hong Kong, Iceland, Israel, Japan, Korea, Liechtenstein, the Netherlands with respect to Aruba, Norway, Singapore, Switzerland, Taiwan and the United States. The updated agreement will enter into force when two-thirds of them have deposited their instruments of approval, which could occur within a year. Also at that time the WTO will initiate several related work programs, including one aimed at facilitating participation by small and medium-sized businesses.

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